A Tickfaw man was arrested on the north shore Friday for running a $19.5 million Ponzi scheme, the second case involving such a financial fraud in Louisiana this week.

The arrest came about an hour after a federal grand jury in New Orleans returned a 64-count indictment against Matthew B. Pizzolato, 26, for allegedly stealing investments from 160 elderly clients from the New Orleans and Baton Rouge areas.

The indictment included 52 counts of mail fraud, two counts of wire fraud, seven counts of money laundering, one count of securities fraud and counts of witness tampering and obstruction of justice.

Pizzolato was the head of 20 different companies in Baton Rouge, Covington, Hammond and Lake Charles, according to the indictment.

A Ponzi scheme is a form of financial fraud in which an operator pretends to invest clients' money but is actually using cash from a stream of new investors to create the appearance of profits on existing accounts. The most infamous Ponzi purveyor is Bernard Madoff, the disgraced New York financier who pleaded guilty in March to masterminding a $65 billion Ponzi operation.

Pizzolato preyed on elderly clients since at least 2005, promising steep returns on investments in high-risk futures markets and commercial real estate, according to U.S. Attorney Jim Letten, who prosecuted the case with the help of the FBI, U.S. Postal Service and Louisiana Office of Financial Institutions. Pizzolato advertised his services on the Internet and in Louisiana newspapers, according to the indictment.

Like Madoff, Pizzolato allegedly used his ill-gotten gains to bankroll a luxurious lifestyle. Pizzolato had a penchant for high-end cars, purchasing a BMW, Mercedes Benz, Range Rover and Corvette with investor money, the indictment said. Pizzolato also built a half-million dollar home in Ponchatoula and bought a $35,000 engagement ring. His friends and family members also benefited from Pizzolato's largesse, allegedly receiving millions of dollars in payments.

On its Web site, a Pizzolato company called Gulf Region Guaranty Inc. described itself as a provider of "safe money management" for "elite investors around the globe," according to the indictment.

Pizzolato's clients allegedly received small payments they thought came from interest earned on their deposits. But Letten described those checks as "lulling payments" meant to deceive investors. In reality, Pizzolato spent the vast majority of the $19.5 million he received from his clients, Letten said during a news conference Friday at the Hale Boggs Federal Building in downtown New Orleans.

"We are going to try to make the victims whole if we can," Letten said, explaining that investigators would attempt to liquidate any assets Pizzolato may have to repay investors, many of whom deposited their life savings in the Ponzi operation.Federal agents learned of Pizzolato's activities after receiving a tip from the Louisiana Office of Financial Institutions, or OFI, which oversees state-chartered banks and financial firms.

"We were getting calls from investors...but things just didn't sound right," said Rhonda Reeves, the OFI's deputy commissioner of securities. "At that point we started asking more questions, and then it just grew into this investigation."

The OFI issued a cease-and-desist order against Pizzolato in January of 2008, ordering him to stop selling securities through Gulf Region Guaranty Inc., Gulf States Guaranty LLC, Allegiance Financial LLC and Cornerstone Wealth Management LLC.

Sherel J. "Sonny" Pizzolato Jr. also was named in the cease-and-desist order. Letten declined to comment about whether Sherel Pizzolato is under investigation by his office.

The OFI lifted Pizzolato's cease-and-desist order soon after it was issued, however, because the case had been transferred to federal authorities, Reeves said.

Pizzolato was still taking investments as recently as a few weeks ago, Letten said.

Securities firms registered in Louisiana are typically audited by the OFI every other year, said Len Riviere, the agency's deputy chief examiner. Pizzolato's companies were not registered with the state, however, and the securities he dealt were exempt from state oversight, Riviere said.

Pizzolato's indictment represents the third case of a Ponzi scheme by a Louisianian this year. On Thursday, the Tangipahoa Parish Sheriff's Office arrested William J. Chaucer Jr. of Ponchatoula for his role in a separate Ponzi operation. Chaucer allegedly stole more than $11 million and used the money to pay for Mardi Gras krewe memberships and plastic surgery, among other personal expenses.

In August, former Metairie resident Judith Zabalaoui received an eight-year prison sentence for operating a Ponzi scheme that stole as much as $5 million from clients in the New Orleans area.

Note: This story was updated Aug. 21, 2014, based on information from the Louisiana Office of Financial Institutions.

Jen DeGregorio can be reached at jdegregorio@timespicayune.com or 504.826.3495.